State of Indian Economy: Measures to Improve
The state of Indian economy is bad. The government is in denial. The situation will get worse because the government has neither the capacity nor the intention to improve the economy. Hence the government is vigorously pursuing NRC & Citizenship Amendment, which are in accordance with Modi’s divisive agenda and can be effectively used till the next elections in 2024. Apparently, neither Modi, nor ‘Modi-bhakts’ are concerned about the economy and are happy so long as anti-Muslim, anti-liberal and anti-sensible people policies are pursued vigorously. In this blog I have explained as to how India reached where it did & what are the measures which can be taken to improve things.
Don’t Believe Government False Propaganda
To know the truth please do not believe the government’s false propaganda. The highlights of which are:
- Modi stated in America during “Howdy Modi?” that all is well in India.
- FM said that the sale of automobiles has fallen because millennials use Ola & Uber.
- Shankar Prasad said that since movies are earning above Rs 100 crore means that all is well.
- BJP MP Nishikant Dubey on Monday, 2 December, said in the Lok Sabha that it should not be taken seriously. He added that the concept of GDP was “introduced only in 1934” and “it will be irrelevant in the future.
- Indian economy is down because global economy is down.
- It is a cyclical phenomenon and nothing needs to be done and the economy will improve on its own.
- Government will meet the fiscal deficit target.
Believe only Facts
I am categorized as Leftist, Liberal, anti-Modi and pro-Congress. Please do not believe me; believe only the facts. Please note these facts indicating a slowdown:
- GDP growth rate in the last quarter has been reported as 4.5 per cent in the last quarter by the finance ministry. (Please note, this figure is given by the government & hence the actual figure would be lower factoring the government’s propensity to lie and also that the figure does not factor in the state of the unorganized sector).
- Unemployment is highest in 45 years.
- Consumption is lowest in 40 years.
- Electricity consumption is lowest in last 15 years.
- IMF & Moody’s have lowered India’s growth forecast and lowered India’s credit rating.
- RBI has lowered growth forecast to 5%.
- Inflation is rising & hence in the last meeting of MPC interest rates were not lowered by the RBI.
- The economic slowdown is taking a toll not only on the Central government finances, but on state finances as well. Particularly worrying is the lower than expected GST collections. State governments have reportedly been told that the compensation requirements of states, owing to the shortfalls in GST collections, are “unlikely to be met” from the compensation cess being collected.
- Output of eight core infrastructure industries contracted for the second month in a row by 5.8 per cent in October, the lowest in over a decade, indicating the severity of economic slowdown.
- As many as six of the eight core industries — coal, crude oil, natural gas, cement, steel and electricity — saw a contraction in output in October.
- Coal production fell steeply by 17.6 per cent, crude oil by 5.1 per cent, and natural gas by 5.7 per cent, according to the data released by the Government on Friday.
- Production of cement (-7.7 per cent), steel (-1.6 per cent), and electricity (-12.4 per cent) also declined during the month.
- The only sector that posted growth in October was fertilizers where production increased by 11.8 per cent year-on-year.
- Growth in output of refinery products slowed down to 0.4 per cent in October as against 1.3 per cent in the same period last year. The eight core sectors had expanded by 4.8 per cent in October 2018.
- During the April-October period, the growth of core industries fell to 0.2 per cent against 5.4 per cent in the year-ago period.
- As per a paper released recently, the proportion of young workers, those in the age group of 18-30, in the MGNREGA scheme, has begun to rise, especially after 2017-18, when the economy was hit first by demonetisation and later by the implementation of the GST.
- Nobel laureate Abhijit Banerjee had recently pointed to a worrying factor — average consumption expenditure at 2018 prices had fallen from Rs 1,587 per person each month in 2014 to Rs 1,524 in 2017-18 in rural areas, according to NSSO data.
- Global slowdown has only affected India’s exports which is an adverse impact. Conversely the global slowdown has lowered oil prices which has reduced the current account deficit.
Some Interesting Facts about Wealth
- As per some reports the fiscal deficit last year was 6.1% of GDP & not 3.4% as stated by the government & in this year it is likely to go above 8 % of GDP & thus government is finding it difficult to meet its commitments of expenditure.
- Adani & Ambani’s wealth more than doubled under Modi’s misrule between 2014-19.
- As per ADR report BJP’s income increased by nearly 81 per cent from Rs 5.70 billion in 2015-16 to Rs 10.03 billion in 2016-17. In 2019 BJP received 95% of Rs 6000 crore electoral bonds.
- Jay Shah’s wealth grew more than 16,000 times under Modi’s misrule.
- Money parked by Indians in Swiss banks rose over 50% to Swiss Francs (CHF) 1.01 billion (₹7,000 crore) in 2017.
- Maybe some of you remember PM Modi said, “Na khaunga, na khane doonga”. He should have said, “I along with my cronies will eat & make the masses poor!”
How Modi Ruined Economy?
- Demonetisation & GST caused a loss of approximately 3 percent of GDP. It broke the backbone of the unorganized sector and rural economy. Major part never recovered.
- Incompetent handling of the NPA problem by Modi and causing an increase in NPAs through acts of omission or commission. NPAs rose under Modi from around Rs 3 lac crores to over Rs 10 lac crores. Modi contributed to creation of more NPAs through Mudra scheme.
- Mishandling of the telecom sector, mining sector, aviation sector, real estate sector, textile industry and Railways, causing increase in NPAs and loss of GDP.
- Removal of all people from financial management who understood economics, namely Raghuram Rajan, Urjit Patel, Subramanian, Panagriya and Roy. The only person who understands economics left in the government is Bibek Debroy. History will hold him blame worthy of rating personal advancement above national interest.
- Assigning responsible appointments related to finance to own loyalists or followers of RSS ideology. Sitharaman, Piyush Goyal, Shaktikanta Das or for that matter Modi-Shah are no great economists.
- Ending the autonomy of the RBI.
- Centralized all decision making in which he did all the decision making & all others were rendered irrelevant because they had to be just yes-men. It is not that all the people in the government do not understand anything, but have rated their personal advancement above that of national interests. History will hold them responsible for this crime. I cannot believe that someone like late Jaitley did not understand the magnitude of loss demonetisation would cause or the fraud of the electoral bonds scheme.
- Cronies Thrive & Masses Suffer. Promoted only his cronies at the expense of fair play of market forces. Promotion of Jio, Rafale scam, Crop Insurance Scheme scam are just some indicators.
- Promoted Wealth & Wealthy to Leave India. Since NDA-I under PM Modi came to power in 2014, the aggregate outflow of money under the LRS scheme has so far amounted to over $45 billion, as compared to $5.45 billion during the 2009-14 period under the UPA-II government. Compounding the problem of outflows from India is the fact that millionaires are migrating from the country by the hordes, and especially so, since 2014. According to data compiled by a team headed by Ruchir Sharma, head of emerging markets and chief global strategist at Morgan Stanley Investment Management in 2018, as many as 23,000 dollar-millionaires have left the country since 2014.
- Illogical Losses. Modi
has been responsible for illogical losses to India for his political ambitions.
- Economic loss of over Rs 15,000 crore in Kashmir valley by removal of Article 370.
- Loss over Rs 14,000 crore of public money in conduct of NRC in Assam. It does not account for the time, money, harassment and deaths of people in trying to prove their identity.
- Approximately Rs 3,000 crore in the statute of disunity (sorry, unity!).
- Massive false propaganda through numerous means and fabrication of cases against opposition, false creation of anti-nationals in JNU and Bhima Koregaon Case.
- Cow politics of Modi has caused numerous losses to the milk, beef & leather industries. The stray cattle menace has caused farmers to spend extra money & effort in guarding their crops.
Crucial Issues for Our Economy
Two major issues for Indian economy have been oil prices and monsoon rains. India is lucky that we have had a good monsoon & oil prices have been low. If we have any of the two things going bad, we would become desperate. India has a demographic dividend of young population. If we do not act fast then we risk losing this dividend and turning them to desperation and crime.
Engines of Growth
There are the four engines of growth: domestic demand (consumption), private investment, public investment & exports.
Government needs to focus on increasing domestic demand & public investment. Once this is done it can be expected that private investment will also increase. Government can focus on export promotion but that will not make a significant difference in the near term.
In the present serious crises, no piece-meal solutions will work. Holistic solutions to governance are needed.
Solutions Impossible Under Modi Misrule
Unfortunately, most of the solutions are not possible so long as Modi-Shah remain in power. Some are possible. Let us analyse first the required economic reforms which are not possible till Modi-Shah government falls:
- After the great back-breaking shock of demonetisation, India has to now get ready to have its legs broken by the twin blows of NRC and Citizenship Amendment Act. We will soon have crores lining up to prove their citizenship, giving bribes, suffering hardships and deaths. This will cause great misery and economic losses.
- Modi-Shah-Ambani-Adani-Amabani nexus running India.
- CBI/ED/Tax terrorism being inflicted upon the corporate not willing to bribe the BJP or having the courage to speak the truth to the government like Bajaj & Shaw. Sustenance in political power through bribing or threats. (Please check as to how MLAs were bought or attempted to be bought in Goa, Karnataka & Maharashtra).
- Restoration of autonomy of RBI and other institutions.
- End of Modi-Shah control of all decision making.
- End of false propaganda.
- End of cow and Hindutva politics.
- Restoration of normalcy in J &K & Ladakh.
- Debate in Parliament to resolve the economic crisis with presentations by Rajan, Subramanian and Banerjee.
- Institute measures to end corruption & black money by establishment of Lok Pal with PM open to scrutiny, end electoral bonds, fast track corruption cases against all politicians.
Solutions Maybe Possible Under Modi
- Increase fiscal deficit even further (tell even more lies) & increase money in the hands of the poorest by increasing allotment for MNREGA & increasing rural infrastructure development. More money in the hands of the poor will prevent them from dying and also increase demand & thus start the chain of economic activity.
- Go ahead with the disinvestment plan vigorously & use the money generated to not clear public debt but increase capital expenditure to increase growth & jobs.
Government Actions. Government should stop telling lies & accept the truth. A crisis is a good time to start reforms. Government should stop the divisive issues of NRC & Citizenship Amendment and focus on the economy. The following should be undertaken forthwith:
- Improve land and labour laws & enhance global competitiveness of industry & have consistent policies for ease of doing business & not just to improve position by global rating agencies.
- Improve GST.
- Debate and institute measures to remove farmers’ distress.
- Debate and institute measures to revive MSMEs & Make in India.
- Debate and institute measures to resolve the NPA crisis within 6 months.
- Debate and institute measures to revive the real estate sector.
- Debate and institute measures to revive the telecom, aviation & mining sectors & Railways.
- Genuinely work to eradicate corruption and increase transparency in governance..
- Improve education & health care.
Actions by People. Considering the track record of Modi-Shah it is unlikely that positive actions to revive the economy would be taken by them. The opposition, particularly the Congress is too weak, corrupt & lacking in moral authority to pressurise Modi-Shah to revive the economy. The media has been bought by Modi & has been so deeply associated with spreading Modi’s false propaganda that it has lost credibility and hence cannot be trusted to help the masses. Interestingly, in Indian democracy today, the government, the media & corrupt corporate are working against the people. This leaves us with the difficult choice of organizing agitations to pressurise the government to act to reform or make efforts to throw them out of power.